ACP Group of States

Lesotho Looks Forward To Post-Cotonou ACP-EU Agreement

By Ntsoaki Nkoe

MASERU (ACP-IDN) – Lesotho, a landlocked kingdom encircled by South Africa, like many other member states of the African, Caribbean and Pacific (ACP) Group, has benefited from partnership with the European Union (EU) through financial assistance from the European Development Fund (EDF) and trade under preferential conditions, says Finance Minister Dr Moeketsi Majoro.

The current ACP-EU partnership agreement adopted in 2000 in Cotonou, Benin, to replace the 1975 Lomé Convention and Georgetown Agreement – expires in February 2020. Work has begun to lay the groundwork for the future partnership between the ACP countries and the EU. The current agreement provides for the opening of negotiations by the end of August 2018 at the latest.

With this in view, ACP Ministers on May 30, 2018 adopted in Lomé a negotiating mandate for post-Cotonou partnership agreement with the European Union. The mandate accentuates that ACP will "engage the European Union Member States and European Commission in a single undertaking for a successor Agreement" as "a unified entity."

Finance Minister Dr Majoro, who attended the ACP-EU Council of Ministers' meeting in Lomé, which wrapped early June, says the gathering was important as it is going to map the way forward for the preparation for the successor program that would replace the Cotonou Agreement.

The Agreement aims to reduce and eventually eradicate poverty and contribute to the gradual integration of the ACP countries into the world economy. It is based on three pillars: development cooperation; economic and trade cooperation; and political dimension.

The EU supports programmes and initiatives benefiting multiple countries in the group of ACP States. It also has programmes for further regional economic growth and development for specific regions within the ACP.

The EU finances most of its development programmes for ACP partner countries through the EDF. These funds are not part of the EU's general budget. They are governed by an internal agreement between Member States meeting within the Council.

The 11th EDF, adopted in 2013, runs from 2014 to 2020, when the Cotonou Agreement expires, and includes a total of €30.5 billion.

Finance Minister Dr Majoro, also an economist, says over €370 million has been committed to Lesotho by the European Commission in the last 15 years.

According to official documents, the EU’s co-operation strategy with Lesotho under the 10th EDF, presented in the Country Strategy Paper for Lesotho (2008-2013) , focuses on infrastructure, in particular water and sanitation as well as human development, predominantly through Support Programme to Orphans and Vulnerable Children contributing to fight HIV/AIDS and tuberculosis, which is crucial for the country's development. This is underscored by the fact that around 31 percent of the population aged 15-49 is believed to live with the disease that is threatening the lives, livelihoods, social fabric and future of people in Lesotho.

This is complemented by general budget support that is monitored against the achievement of targets specific to maintenance of stability-oriented macroeconomic policy, progress in implementation of the National Strategic Development Policy, improved public financial management and public sector reform.

Furthermore, the EU supports Government actions to consolidate the ongoing decentralization reforms, to improve justice sector and governance and strengthen non-state actors as well as support to private sector.

The original multi-annual indicative programme for Lesotho under the 10th EDF amounts to €136 million to address these priorities. The current allocation is €161.8 million, after taking into account adjustments resulting from the Mid Term and ad-hoc reviews.

Lesotho, Dr Majoro says, has also benefited from preferential market access to the European Union exporting agricultural products, textiles and diamonds.

Besides, the Economic Partnership Agreement (EPA) ratified by Lesotho in 2016, guarantees continued access to the EU market. However, the Finance Minister says, market access does not guarantee increased trade.

“It is production capacity that ensures that Lesotho has things to sell. Our considerable potential in primary and processed agricultural crops has not materialized into actual production, exports and trade with Europe,” he explains. This is where Lesotho investors should focus on, Dr Majoro adds.

He says his government is working on global trade standards that would make it possible for crops such as asparagus to find their way into European markets. "Likewise our trade capacity on garments has focused mainly on AGOA, devoting little capacity to the high-value textile needs in Europe," he adds. AGOA, the African Growth and Opportunity Act, is a United States Trade Act, enacted on May 18, 2000 as Public Law 106. It has since been renewed to 2025.

Lesotho, Botswana, South Africa, Mozambique, Namibia and Swaziland signed the EPA with the EU in June 2016 after more than a decade of negotiations.

The agreement provides for enhanced market access, development cooperation and an asymmetric trading relationship which is favourable for EPA states as they are either developing or least developed countries. The member states have to develop implementation plans and review certain institutional arrangements that address the core issues of the agreement.

The EU delegation was in the country to present the terms and conditions of the agreement, steps to follow when shipping goods under EPA and also the ten benefits of the programme.

During the presentations it was reported that the EPA offers flexible conditions with regards to the rules of origin under which ACP countries can easily source raw materials for their products elsewhere without losing their access to the EU market.

Some of the benefits of the EPA include the creation of new business opportunities as firms from ACP which can freely export to the EU and further import the inputs they need for final products at reduced costs.

The EPA targets to assist countries to attract more investors through long-term stability as the EPAs are permanent, expand the economy through the emergence of new industries and create jobs and offer trade aid which helps countries adapt their customs procedures and reduce paperwork. This will reduce import and export, thereby reducing import and export meaning lesser difficulties.

EPA enables ACP countries to protect their local producers that might struggle to compete against EU imports by keeping tariffs on sensitive goods such as foodstuffs as well as assist in the production and exportation of higher value processed goods.

ACP farmers are also assisted to meet the EU’s high standards in food safety as well as animal and plant health, enabling them to seek help if problems arise.

The EPA also advocates for the integration of ACP countries’ economies by promoting regional value chains where a country can process inputs from neighbours and still benefit from the duty-free regime in Europe.

The agreement will entail compliance with International Labour Organisation laws and further promote environmental protection, good governance and protect human rights and also opens channels for EU development aid.

Underlining the importance of the ACP-EU partnership agreement, Thabo Qhesi, president of Private Sector Foundation of Lesotho says the agreement enables Lesotho's companies to access EU market without any hindrance.

According to Qhesi, Lesotho has already got financial support from the EU to effect certain investment reforms through Trade Related Facility. He cites capacity building on standards related matters as one example. Observance of standards, says Qhesi, will enable products of Lesotho to access the global market without any hindrance. Chances of getting foreign investors from EU, he adds, are very high, which will eventually create job opportunities for local people. [IDN-InDepthNews – 15 June 2018]

Photo: EU trade mission led by Brussels-based Trade Affairs Officer of the Directorate General for Trade of the European Commission, Roberto Cecutti visited the Kingdom of Lesotho's capital, Maseru, from 14-15 March 2018. Credit: European Union.

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